Environmental Business Charter
The Environmental Business Charter – a “soft touch” introduction to how environmental concerns can be integrated into the corporate and legal services environment.
What this clause does
This charter helps professional firms and their clients to align their business practices with the goals of the Paris Agreement and best practice. It provides an exemplary standard for business partners to support their clients’ net zero transitions.
Clauses
Environmental Business Charter
The intention of the Environmental Business Charter is to incorporate environmental awareness and best practice in the legal community. We recognise that the business and legal community can use their combined influence to support the decarbonisation of the economy. In this way, the Charter is practical and commercial. It recognises the power of the legal and financial community to positively shape the future. By placing environmental issues at the forefront of business, the business community can guarantee its ongoing success and influence.
The Charter will encourage discussion and reflection on how individuals and businesses can achieve change.
[Firm/ Company] Undertakings
1. Join the [Net Zero Lawyer’s Alliance/ the Legal Sustainability Alliance/ insert other relevant environmental organisations].
2. Measure, independently verify and publish its GHG Emissions.
3. Publicly set a Net Zero Target [approved by the Science Based Targets initiative][and sign up to the Race to Zero].
4. Develop and take initial action to deliver the Net Zero Target and remain Net Negative thereafter, including:
(a) an Offsetting Strategy;
(b) setting interim targets split into scope 1, 2 and 3 emission reduction targets;
(c) continuous measured reduction of scope 1, 2 and 3 emissions;
(d) identifying a year-on-year percentage decarbonisation aligned with the Paris Agreement goal of pursuing efforts to limit the global temperature increase to 1.5°C above pre-industrial levels [which shall be, at least, a 7%* year-on-year reduction of absolute emissions][;] [and
(v) evaluating how the Net Zero Target can be delivered in a way that promotes a just transition to a low carbon economy].
* [Drafting note: It is suggested that, as minimum, firms/ companies should aim to halve absolute emissions every decade (a 7% year-on-year reduction): The ‘Carbon Law’; and J. Rockström et al., A roadmap for rapid decarbonisation, Science 355.6331, 1269-1271 (2017).]
5. Use contractual clauses (for example, precedents published by The Chancery Lane Project) to embed the Net Zero Target in all of the [firm’s/ company’s] activities and relationships. Include climate clauses in the majority of the precedents used by the [firm/ company].
6. Be transparent and consistent on green ratings and credentials, including regular evaluation and reporting models, and annual evaluation.
7. Conscious Travel, Technology and Transaction Protocols
7.1 While the importance of building relationships at face-to-face meetings is recognised, the climate impact of business travel and flights should be weighed against this when individual travel decisions are taken. Encourage virtual meetings as the default.
7.2 A business case should be made for practices that are not in keeping with the [firm’s/ company’s] environmental charter. Consider putting in place a corporate travel reduction plan, perhaps classing travel into high, medium and low priority; with low priority travel requiring internal approval from a [partner/ director] with responsibility for the [firm’s/ company’s] sustainability policies.
7.3 Implement green transaction protocols, and green arbitration and litigation protocols throughout the business. [Drafting note: See The Chancery Lane Project: Evan’s Protocols (Green Transaction Execution Protocols), Emilia’s Protocols (Green Litigation and Arbitration Protocols), Toby’s Clause (Avoiding Excessive Paperwork in Dispute Resolution) and Mia’s Clause (Low Carbon Arbitration Hearings).]
8. Procurement
Invest in and encourage sustainable and local sourcing, implement circular economy principles and reduce food, plastic, water and other waste.
9. Long term decision making and leadership
9.1 Consider amending constitutional documents to include fiduciary duties that consider the climate and the environment in all decisions and senior management representation of climate interests.
9.2 Establish a sustainability committee as part of the senior management structure, advised by an appropriately qualified climate, sustainability or environmental consultant with the skills and experience to diligently, competently and professionally advise on improving sustainability and mitigating the [firm’s/ company’s] carbon footprint.
9.3 Consider environmental best practice in all transactions including sharing a ‘toolkit’ of terms, environmental governance practices and clauses to promote the environment with other firms and companies.
9.4 Consider how the [firm/ company] can promote climate leadership and help smaller, lower income [firms/ companies/ organisations] and those in lower income countries to reduce their GHG Emissions.
9.5 Identify commercial risks and opportunities raised by decarbonisation and failure to decarbonise. Encourage the use of ‘green’ language as commercial language.
10. Employee training and incentives
10.1 Provide a regular environmental and sustainability training programme (at least annually) for employees, personnel and contractors during their usual working hours (and online as required) to cover, as a minimum:
(a) the latest climate science;
(b) use of contractual clauses to address climate risks and impacts for all transactions and advice;
(c) climate change policy and relevant legal context (including core terms of the Paris Agreement and any national implementation measures);
(d) the economic and social (e.g. health) benefits to the [firm/ company] in reducing the workplace’s environmental impact;
(e) sustainable lifestyle changes and issues relating to the workplace;
(f) details of the [firm’s/ company’s] public and contractual commitments, targets and governance in relation to climate change and sustainability; and
(g) other topical climate and sustainability issues.
10.2 Consider linking the remuneration of key employees to sustainability and Net Zero Targets. [Drafting note: As an example, see The Chancery Project: Scarlett’s Performance Conditions (Environmental, Social and Governance (ESG) Based Performance Conditions for Employee Incentive Awards).]
10.3 Invest the employee pension scheme with an ESG/ green investment fund as the default.
10.4 Be flexible with leave and remote working to accommodate and encourage train travel.
10.5 Offer employees the ability to use company offset schemes to offset their own emissions.
10.6 Offer employees climate sabbaticals including for the purposes of environmental education. [Drafting note: See The Chancery Lane Project: Eric’s Clause (Employer-Employee Environmental Obligations).]
11. Climate Risk Management
11.1 Report on the [firm’s/ company’s] climate policy engagement, climate leadership, lobbying activities, trade association memberships and public policy positions that may support or undermine the goals of the UNFCCC’s Paris Agreement.
11.2 Consider whether the [firm’s/ company’s] [client/ customer] base aligns with its environmental targets and policy, including clients’ climate policy engagement, as described above. This may include a risk management plan where clients/ affiliates are identified as 'high risk' to reputation/ risk profile.* Develop a plan of action to be taken as a result of such analysis.
11.3 Consider reporting annually on the climate risks and opportunities to the [firm/ company] and its business in accordance with the recommendations of the International Financial Reporting Standards Foundation (IFRS).
* [Drafting note: A template risk management plan could be included as a schedule to this Charter.]
12. Stakeholder Interests
12.1 Consider wider local and global stakeholders (including employees, clients, pro bono charity partners and supply chain partners). Consult and map how wider local and global stakeholders are affected by climate risk and transition and identify what the firm might do to help them to improve resilience.
12.2 Consider how the firm’s pro bono programme could incorporate climate considerations.
Definitions
GHG Emissions means emissions of the greenhouse gases listed at Annex A of the 1998 Kyoto Protocol to The United Nations Framework Convention on Climate Change, as may be amended from time to time, including carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), nitrogen trifluoride (NF3), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs) and sulphur hexafluoride (SF6), each expressed as a total in units of carbon dioxide equivalent (CO2e) and from all sources categorised as scope 1, 2 and 3 emissions by The Greenhouse Gas Protocol: A Corporate Accounting and Reporting Standard, Revised Edition 2015 as updated from time to time. [Drafting note: Scope 1, 2 and 3 emissions are defined on page 27 of the GHG Protocol.]
Net Negative means that the aggregate of the [firm’s/ company’s] actions to reduce its GHG Emissions and remove them from the atmosphere exceeds its unabated GHG Emissions. [Drafting note: See TCLP Glossary: Net Negative for definition options and explanatory notes. On a global scale, removals of Greenhouse Gases should be consistent with the mitigation pathways that would limit global warming to 1.5°C, with little to no overshoot. See IPCC Special Report on Global Warming of 1.5 ºC, Summary for Policymakers, Part C Emission Pathways and System Transitions Consistent with 1.5°C Global Warming.]
Net Zero Target means both a reduction of GHG Emissions overall and a removal of GHG Emissions associated with offsets acquired to address the Residual Emissions of the [firm/ company] by 2050 or sooner, to achieve a balance between the [firm’s/ company’s] sources and sinks of GHG Emissions in a calendar year and for each subsequent year thereafter, and to achieve the goals of the Paris Agreement.
Offsetting Strategy means a plan that is aligned with the The Oxford Principles for Net Zero Aligned Carbon Offsetting and specifies:
(i) the verified credits from a recognised offset provider that may be used by the [firm/ company] to offset its Residual Emissions;
(ii) how the [firm/ company] will transition from using credits resulting from offsetting projects that avoid or reduce emissions of GHG to those from projects that remove emissions of GHG and involve long-term storage methods that have a low risk of reversal;
(iii) how the [firm/ company] will [use best endeavours to] reduce its use of credits by reducing its Residual Emissions [to zero/ by [x] %] by 2050; and
(iv) the impact of the relevant offsetting projects on a just transition and wider social and ecological goals.
Residual Emissions means GHG Emissions that are emitted [from all operations of the [firm/ company]] [including value and supply chains] after all reasonable efforts have been made [by the firm/ company] to reduce GHG Emissions [from all operations] [including value and supply chains]. [Drafting note: See TCLP Glossary: Residual Emissions. The language in square brackets “[from all operations] [including value and supply chains]” can be removed if using a definition of GHG Emissions that refers to scope 1, 2 and 3 emissions as defined by the GHG Protocol.]
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